478 B.R. 88
Bankr. D. Mass.2012Background
- Debtors filed Chapter 13 over 2009; they are below-median for Massachusetts household size; original plan confirmed June 23, 2011 with $407 monthly payments for 36 months toward mortgage arrears and fees, plus a pot-plan structure for unsecureds; excess funds and tax refunds were to be turned over to the Trustee; post-confirmation plan modification sought to extend to 60 months and allocate excess funds to priority claims and attorney’s fees; Trustee objected to the modification for not devoting all disposable income to the plan during the extended term; Debtors argued §1325(b) does not apply to §1329 modifications and that below-median debtors have only a three-year applicable commitment period; the Court held a fee hearing and required the Amended Plan to address Excess Funds, MDOR, and priority claims; the dispute centers on whether disposable income must be paid for the entire term when extending beyond three years.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does §1325(b) apply to post-confirmation modifications under §1329? | Debtors: §1325(b) does not apply to §1329 modifications. | Trustee: §1325(b) applies to modifications via §1329 by incorporation through §1325(a). | Yes, §1325(b) applies to post-confirmation modifications. |
| Must below-median debtors commit all disposable income to the extended plan term? | Debtors: applicable commitment period ends in 2012; beyond that, not required to devote all disposable income. | Trustee: must devote all disposable income for entire plan term if extending beyond three years. | Below-median debtors must devote all disposable income for the entire term when extending beyond the three-year period. |
| May Excess Funds be used outside the Amended Plan to pay attorney’s fees or MDOR claims? | Debtors: Excess Funds may be used outside the plan after three years. | Trustee: Excess Funds must be turned over to Trustee and used within plan; MDOR and fees must be in-plan. | Excess Funds must be dedicated to the plan; MDOR and attorney’s fees must be provided for within the plan. |
| Can plan be completed upon satisfaction of priority and administrative claims despite no further distribution to general unsecureds? | Debtors: permissible if priority claims are paid in full; potential windfall to unsecureds avoided. | Trustee: completion language must still honor disposable income requirements. | Plan may complete upon satisfaction of priority and administrative claims; no further distribution to general unsecureds required. |
Key Cases Cited
- In re Keller, 329 B.R. 697 (Bankr.E.D. Cal. 2005) (support for applying §1325(b) to post-confirmation modifications via §1329 through §1325(a) cross-reference)
- In re Heideker, 455 B.R. 263 (Bankr.M.D. Fla. 2011) (affirms §1325(b) applicability to post-confirmation modifications; rejects exclusion approach)
- In re Rodger, 423 B.R. 591 (Bankr.D.N.H. 2010) (below-median debtors extending beyond three years must devote all disposable income)
- In re Stretcher, 466 B.R. 891 (Bankr.W.D. Tex. 2011) (recognizes §1325(b) relevance to post-confirmation modifications)
- In re Richall, 470 B.R. 245 (Bankr.D.N.H. 2012) (disposable income considerations post-BAPCPA for extended plans)